The Rayleigh-Taylor instability of a plasma layer in the presence of a horizontal magnetic field is investigated, taking into account the effects of Hall-currents and an arbitrarily large density gradient. It is shown for the general case that if the density decreases vertically upward, the system is thoroughly stable. For a plasma layer with exponentially varying density an approximate dispersion relation is obtained using the Galerkin's method. An analysis of the roots of the dispersion relation reveals that the Hall-currents loosen the stabilizing influence of the magnetic field and impart instability to the system. For sufficiently large values of the density gradient and the Hall currents the system is throughly destabilized for all perturbations.